ActiveTrader
Long

GBP/AUD - Dominant Trend Reversal & Fibonacci Synchronicity

FX:GBPAUD   British Pound/Australian Dollar
The GBP/AUD             pair has endured a powerful bear market since 2001, however, many correlating indicators are suggesting that we may be close approaching a confirmed pivotal change in the dominant trend.

Our first major indicator was the cross of the 50/200 Exponential Moving Averages which occurred in January of 2014. The last time these indicators crossed was back in the summer of 2003             following a massive monthly head & shoulders pattern in 2001 at 2.95000. This "Death Cross" contributed to the acceleration of the bear market following the H&S topping pattern.

We are currently witnessing an identical inverse scenario taking place as we transition into a powerful bull market. Taking a closer look we can see a 2 year descending triangle reversal pattern that formed from April 2011 - April 2013 with 1.4750 acting as the floor. Following the breakout of this impressive reversal pattern, we can take note of the 50/200 EMA "Golden Cross". Remember, the last cross of these EMA's was back in 2003             ; a solid 10.5 years ago. We have remained in a bull market ever since the most recent "Golden Cross"

The recent price action has been exceptionally bullish ; with this pair currently reflecting a massive bullish channel. This channel developed following a complex ABC pullback pattern that occurred after the "Golden Cross"; re-testing the 200 EMA as new support.

Coming up to speed with last week, we had a massive bullish pinbar form at the key Support/Resistance level of 1.9000. This level acted as major resistance at the end of January 2014 which kicked off the ABC Pullback Pattern. We have now re-tested that 1.9000 level as support with a bullish pinbar that is indicating a new leg higher in this bull market.

Utilizing our Fibonacci Tool, we are able to measure and identify that each new bullish drive off the bottom trend-line of the channel has occurred at the .618 Fibonacci Retracement of the previous up-move. Price then went on to target the 1.618 Fibonacci Extension with 100% accuracy.

Keeping this in mind, the textbook price action of the last weekly pullback that ended with a pinbar reversal candle, point to the high-probability of the next bullish wave targeting the 1.618 Fibonacci extension at 2.07500. What makes this target even more appealing is the fact that the 50% Fibonacci Retracement of the last bearish leg down (measuring from the previous swing high at 2.7000 to the descending triangle lows) lies exactly at the 1.618 weekly extension at 2.07500. If this target is reached, broken, and re-tested as new support, this opens up the .618 Fibonacci retracement @ 2.22500 as Target 3.

Last week's bullish pinbar provides us with the proper technical signal to enter a long position on GBP/AUD             with 3 logical upside targets. Target 1 being the previous key resistance at 2.000 which triggered the most recent bearish pullback. Target 2 is our 1.618 weekly Fibonacci extension as outlined above. Target 3 is the .618 Fibonacci retracement of the previous bearish leg.


Daniel.L
2 years ago
Astounding analysis as usual! Incredibly lucky to have you as one of my mentors. :D
+1 Reply
ActiveTrader PRO Daniel.L
2 years ago
Thank you Daniel!! I appreciate the kind words! Let's get after it this week!

+1 Reply
Laban132 PRO Daniel.L
2 years ago
I'll second that!
+1 Reply
moneymaking
2 years ago
Whaoo, Great in-depth analysis active trader. Great job. Thank You for sharing and Good Luck!!
+1 Reply
ActiveTrader PRO moneymaking
2 years ago
Thank you @moneymaking!! I appreciate all the continued support! Happy Trading!
Reply
moneymaking
2 years ago
Hey active trader, I just wanted to ask you about, the level that might give us a good entry into this trade? I have been trying to look for good entry levels but seems to be getting no where. All I could come up with was to wait for a retracement back into either the previous lower high or the low of the channel. Any other suggestion from you would be great.Thanks!!
+1 Reply
ActiveTrader PRO moneymaking
2 years ago
@Moneymaking I entered this trade at 1.92500 with a safe stop at 1.90500. The entry was based on the break of the weekly pinbar to the upside, and I managed my stop location by viewing the intraday price action
+1 Reply
Yeseribob PRO
2 years ago
Great analysis as always. Just a quick note, the target #2 on the graph should read 2.075 not 2.275 (a quick typo to fix). ;-)
Reply
ActiveTrader PRO Yeseribob
2 years ago
Appreciate the support! Thank you for pointing that out, I will be sure to change it :)!
Reply
Quick question!
Are you already in this trade? If not, how do you plan on entering?
+1 Reply
ActiveTrader PRO callumgott
2 years ago
I took this trade with an entry at 1.92500, stop at 1.90500
+1 Reply
MatejC PRO ActiveTrader
2 years ago
hmm, why did you put your stop at 1.90500?
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I love doing my own detailed analysis and comparing it to yours. When there's a post from you a few days afterwards, I can see what I overlooked or what I got wrong in my analysis. There's always room for improvement, and seeing your analysis is a huge help in identifying gaps in my performance.
So keep up the good work bro, this is huge! Thank you for all the effort you put into our education!
+1 Reply
ActiveTrader PRO AdrianWolfFX
2 years ago
@AdrianWolfFX Thank you for the continued support!
+1 Reply
ActiveTrader PRO ActiveTrader
2 years ago
AT wouldn't be what it is without committed students like yourself putting in that work and dedication! It's all about discipline and perseverance!
+2 Reply
bblancke PRO
2 years ago
Super, al always Paul. In this trade and already at 3-4%. Really like your trade management lessons which learn me to be more patient.
+1 Reply
ActiveTrader PRO bblancke
2 years ago
Boom!! That is great to hear @bblancke!! Plenty more reward to come on this one ;)! Thank you for the continued support!
Reply
This setup might be the one that'll finally clear up for me how to use multiple timeframe analysis once and for all.

Through this A++ weekly setup, I realized:

- A breakout and retest on daily (that I'm waiting for in this setup) = a lower timeframe retrace, which ≈ the retraces I look for in intradays when I see an A++ daily.

- And then when (if) I get the daily retrace that I'm looking for in this setup, I'll be looking for an intraday retrace!

- It's like a fractal, a box in a box in a box, a Russian nesting doll, or looking at a mirror in another mirror!!

- THIS MIGHT BE WHY FIBONACCI WORKS!

The combination of this weekly setup, the discussions we've had over this setup in the community, Active Trader, and day trading has given yet another huge breakthrough! I think I understand how to place entries using multiple timeframe analysis now!

THANK YOU PAUL!

-Han

BTW, Paul (or Tom), in the event of the price action just running away without retesting 1.90000 - 1.91000, do you just plan on missing this setup?
Reply
Couldn't have timed my intraday entry better on this. Talk about maximising return!
+1 Reply
ActiveTrader PRO MoneyForJam
2 years ago
@MoneyForJam BOOM!! Excellent job!! Keep holding this baby for the long-term!
+1 Reply
anton.everaert
2 years ago
Hey Paul, IP & AT student here.
First i want to thank you and Tom for all the effort and time you put into making us better traders, i know we all appreciate it a whole lot!

This is an amazing analysis as usual, which lines up perfectly with my own views, although i didn't catch an opportunity to enter yet.
One remark though. In the sentence: 'Remember, the last cross of these EMA's was back in 2003; a solid 10.5 years ago. We have remained in a bull market ever since. '
I think you meant to say that it has been a 'bear' market, like you mentioned before and not a 'bull' market.

Anyway, looking forward to the weeks ahead, as i'm sure this will be very interesting times for the markets!
Reply
anton.everaert anton.everaert
2 years ago
(No idea how to edit my comment, so i'll just reply again)
You already edited the sentence, which apparently i misunderstood.
Thanks for clearing it up anyway!
Reply
Great analysis! How do you attribute the Aussie's correlation with gold into this forecast?
Reply
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